Powell’s remarks plunged in disappointment on the New York Stock Exchange… Overseas market conditions such as Tesla

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The New York Stock Market plunged. This is because Jerome Powell, chairman of the US Central Bank (Fed), said “we will be patient” about the recent increase in government bond yields, and did not come up with a clear measure. Tech stocks such as Tesla plunged, and semiconductor-related stocks also closed down. On the other hand, oil refining stocks were strong on rising international oil prices.

3 major index sluggish due to soaring government bond yields again

On the 4th (local time) on the New York Stock Exchange (NYSE), the Dow Jones 30 Industrial Average fell 345.95 points (1.11%) from the previous trading day to 30,924.14. The Standard & Poor’s (S&P) 500 index ended at 3,768.47, down 51.25 points (1.34%), and the Nasdaq index ended at 12,723.47, down 274.28 points (2.11%).

The volatility index (VIX), called the fear index on the Chicago Options Exchange (CBOE), was 28.57, up 7.12% from the previous trading day.

The market was keenly aware of the trends in US Treasury yields and Powell’s remarks. Chairman Powell emphasized at the’Job Summit’ hosted by the Wall Street Journal that “there is pressure on inflation (inflation) but temporary. We will be patient.” Interpretations have been made as to whether the Fed intends to tolerate recent inflation.

Powell also said “it’s eye catching” about Treasury yields, which have recently soared to the 1.6% level. “Asset purchases will continue at the current level until our targets progress considerably. We are ready to use all tools to achieve our goals. It has become,” he emphasized.

However, Chairman Powell did not give hints about the introduction of policies that would help curb interest rate hikes, such as an operation twist (selling short-term bonds and buying long-term bonds) that the market had expected, and extending bank capital deregulation.

After Powell’s remarks, the 10-year US Treasury bond yield surged to the mid-1.5% range.

Seo Sang-young, a researcher at Kiwoom Securities, said, “After Chairman Powell’s remarks related to inflation and comments on interest rates, the Treasury bond rate surged and the index plummeted.” .

Treasury yields soared again… Electric vehicle industry plummeted

The electric vehicle industry plummeted. Tesla closed at $621.44, down $31.76 (4.86%) per share from the previous day. Tech stocks, which have a higher share price (valuation) than their earnings, fall when the Treasury bond rate rises.

The news that Baron Capital founder Ron Baron had sold its stake in Tesla also weighed on Tesla’s share price. Ron Baron said the company sold 1.8 million shares of Tesla’s stock price because it made up too much of the investment portfolio. However, it is said that he did not sell 1.1 million shares.

Share prices of other electric car makers, such as Nio Xiaofeng, also fell 5.42% and 2.23%, respectively. Battery-related stocks such as Quantumscape (-4.46%), Albemarmal (-3.73%) and the Global Lithium Battery Listing Index Fund (ETF) (-6.8%) also fell at the same time.

Semiconductor-related stocks also fell. Micron closed the deal at $84.33, down $4.78 (5.36%) per share from the previous day. Broadcom (-4.2%) and Nvidia (-3.39%) also fell, causing the Philadelphia Semiconductor Index to drop 4.84%.

On the other hand, oil refining stocks surged. ExxonMobil closed at $58.71, up $2.19 per share (3.87%) from the previous day. Konoko Phillips (3.65%) and Chevron (0.88%) also rose. This is due to the rise in international oil prices.

OPEC+ (the solidarity between OPEC and 10 major oil producing countries) decided to almost freeze the production volume in April at a ministerial meeting on this day. The rest of the oil producing countries maintain their April oil production at the March level. Only Russia and Kazakhstan are planning to increase production in April by 130,000 barrels and 20,000 barrels per day, respectively.

Song-ryul Lee, reporter of Hankyung.com [email protected]